TRANSPARENCY TUESDAY: Nobody likes audits. Nobody, except reporters.

Auditors are just like reporters, only with better salaries and MUCH better access. They spend their days picking through government agencies’ spending for signs that programs are working ineffectively or that money is being spent wastefully. In other words, if you are a journalist, they are doing your job for you.

A reminder of the importance of carefully reviewing the audit reports of government agencies comes from our friends at the nonprofit news site California Watch, which reported this week on a 15-month-long review of the finances of the University of California’s 10-campus system.

The report from the California State Auditor flagged several instances in which UCLA earmarked student activity fee money — a total of $23 million worth — for renovations to athletic facilities that were not a part of the referendum when students voted to impose the fee. State auditors called the plan an illegal diversion of fees from their intended purpose, a contention the university hotly denies (claiming that the student referendum is merely “advisory” and not binding).

That was the headline-grabber. But like many audit reports, this one was chock-full of newsy goodness, rewarding the careful reader with any number of leads to pursue:

  • During the five-year period examined by the audit, overall university spending went up by $1.2 billion — but expenses for pension benefits and retiree health coverage went up another $3 billion on top of that. In other words, more than a 30 percent increase in spending was directly attributable to the costs associated with a growing corps of longer-living retirees — a financial time bomb that is ticking under many campuses.
  • At all four campuses with an above-average population of minority students, the auditors noted that per-student spending was below the systemwide average. (Indeed, spending ran a remarkably wide range, from $55,000 per student at UC-San Francisco to $12,000 at UC-Santa Barbara.) While there was no evidence that the system consciously made race-based budgeting decisions, the differential was serious enough for the auditors to notice it — suggesting that campuses with large minority populations may be shortchanged when it comes to the best facilities and technology.
  • The UC accounting system lumps about 25 percent of all non-salary expenses — $6 billion over a five-year period — under a generic heading of “miscellaneous spending,” which makes it difficult to track what is being spent and how spending is changing over time. The auditors noted that this unorthodox accounting “limits the ability of stakeholders” — that’s the public — “to understand how the university uses these funds.”

If you are a reporter assigned to cover the University of California system, this single audit report could give you enough stories to work on for an entire semester. That is the beauty of mastering the use of audits.

At a state institution, there are four potential sources of audit reports, and each is worth checking out:

  1. The State Auditor (or Auditor General), who is an elected or appointed state official and whose reports normally will be easily accessible and searchable online.
  2. A legislative auditor or legislative audit committee, which in some states supplements the work of the State Auditor.
  3. The internal auditor at the campus itself — or, at a smaller institution, possibly at the Board of Regents staff level.
  4. An external auditor, who may be hired (a) to audit the private, nonprofit affiliates of the state college, or (b) to check behind the internal auditor if there is a particular problem requiring independent scrutiny.

If you are vigilant in keeping track of audit reports, and careful in reviewing them, there’s no telling what you might discover. Perhaps that a university hired the construction company owned by a top administrator’s husband to build $200,000 entrance gates. Perhaps that the college wasted money by buying computers from a hometown-favorite vendor instead of going to the state’s lower-priced supplier. Perhaps that the university is pumping up its enrollment numbers by letting students with GPAs as low as zero (that’s as low as they go, right?) re-register despite their academic ineligibility.

There’s really no telling — but you won’t know unless you look.